House prices will fall ANOTHER 10% before the market reaches rock bottom

House prices could fall another 10 per cent left to fall before the bottom of the market is reached, economists predicted today.

Property transactions were likely to begin to rise over the coming months, as the combination of low interest rates, lower prices and improving credit conditions enticed buyers back to the market, according to consultants at the centre for economics and business research.

The number of mortgages approved for house purchase jumped by nearly 20 per cent to 37,000 during February.

House prices will continue to fall for the rest of 2009, forecasters say

The group said if approvals continued to rise to around 50,000 a month by the late summer, house prices were likely to fall by only a further 8 per cent to 10 per cent.

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It said under this model, price falls would start to bottom out by the beginning of 2010, implying a much slower rate of decline this year than was seen during 2008.

Cebr added that if mortgage approvals rose to 60,000 or 70,000 a month, this may be enough to offset rising unemployment, and could lead to house prices bottoming out by the third quarter of this year.

However, the group said it thought it was more likely that mortgage approvals would only 'tick up slowly'.

It said: 'The last month has seen the first real encouraging data on the housing market for quite some time.

'Both the Halifax and Nationwide price indices have recently seen their first monthly rises since the end of 2007, although both can be taken with a large pinch of salt given the vanishingly small sample sizes that these indices are now based upon.

'However, the Halifax index for the first quarter of this year also showed the smallest quarter-on-quarter fall in prices since the first quarter of 2008, which is a little more interesting and a possible sign that prices are starting to bottom out.'

But the group added that the housing market remained 'on a knife edge', with credit conditions likely to remain tough for some time to come.

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House prices will fall ANOTHER 10% before the market reaches rock bottom